Detroit’s City Retirees Worry Pensions Won’t Be Paid

Representatives of Detroit’s active and retired public workers wait for a meeting in Detroit, Wednesday, July 10, 2013. (Paul Sancya/AP)

Michigan Governor Rick Snyder says he’s not sure whether all of the people owed money by the city of Detroit will ever be paid, now that the city has declared bankruptcy.

He says the city will continue to pay its bills and its current employees — but no one is sure what will happen to the 21,000 retirees who depend on city pensions and medical care to live.

The money provided to the pension fund is the second largest expense for Detroit, after fire and police services.

Retirees say lawmakers made bad decisions that led to the the pension fund being in the red by $3.5 billion — but officials say they failed to negotiate with the unions to lower the pension payments.

Guest

Cynthia Falska, worked for the Detroit Police Department for 33 years. Her husband is also retired from the department.

Transcript

JEREMY HOBSON, HOST:

From NPR and WBUR Boston, I'm Jeremy Hobson.

ROBIN YOUNG, HOST:

I'm Robin Young. It's HERE AND NOW. In a moment, bestselling author Lionel Shriver; her brother died of morbid obesity. In her new novel, a sister tries to save her big brother from this disease.

HOBSON: But first to the largest city bankruptcy in U.S. history and the battle that is just beginning in Detroit. Republican Governor of Michigan Rick Snyder says he's not sure whether some of the people owed money by the city will ever be paid, but he said something had to be done.

GOVERNOR RICK SNYDER: Has anyone liked the Detroit of five years ago, of 10 years ago, of 15 years ago? How long has this gone on and people had not stopped to say stop kicking the can down the road and do something?

HOBSON: Detroit will continue to pay its bills and employees for now, but there are big questions about who will eventually have to make sacrifices. And one person who thinks she will is 63-year-old Cynthia Falska. She was with the Detroit Police Department for 33 years. Her husband is also retired from the department. She joins us now from her home in Eastpointe, just outside Detroit. Cynthia, welcome.

CYNTHIA FALSKA: Hello.

HOBSON: Well, so how are you feeling about this? How are you reacting to this news of this bankruptcy?

FALSKA: Well, it's a lot of uncertainty, a lot of stress. You feel betrayed. You worked for a city and put your life on the line every day to protect its citizens, and you thought you're guaranteed a pension and health benefits, and then you find out after you retire for a while that they want to take all this away from you, and you wonder how are you going to live.

HOBSON: You think they want to take it away from you?

FALSKA: Yes.

HOBSON: How much do you get a month from your pension?

FALSKA: I get about - I don't know, I would say about $50,000 a year, gross.

HOBSON: Fifty thousand a year, and you also, your husband is also drawing a pension, right?

FALSKA: Right, but he gets less than I do.

HOBSON: So how dependent are the two of you on the money you're getting from your pension?

FALSKA: Well, that's my only income. I have no other source of income, and I'm not eligible for Social Security. So that's it.

HOBSON: And we should say that you also have some medical issues that are requiring probably a lot of money right now.

FALSKA: Well, I have medical issues. I had two kidney transplants, and I take 21 pills a day. And with my current Blue Cross, because I have Blue Cross, I get two prescriptions free, but my co-pays still come to about $125 a month. And they want to take away our medical insurance and put everybody under Obamacare.

HOBSON: Well, so what would you have the city do at this point? It's kind of between a rock and a hard place.

FALSKA: Well, the retirees, when we worked for the City of Detroit, we had to live in the City of Detroit. So we supported it throughout our whole career. So we paid taxes and supported it. And I think they should live up to their end of the bargain. You know, this is the agreement, when we got on the job, that they made with us. And I understand the city's in financial straits, but it's not the fault of the retirees.

It's the fault of the mismanagement and corruption by city officials for the last 35 years.

HOBSON: Well, who would you have pay for the trouble now then?

FALSKA: Well, I think from maybe this point on, with the current employees they need to change the system. But I think the retirees need to be left alone. We worked. We honored our agreement. We lived up to our commitment.

HOBSON: There is an editorial in the Detroit Free Press that points out, however, that over the years the city added some pension sweeteners such as early retirement instead of union pay increases, which ended up digging the city deeper into a financial hole. So aren't unions partly to blame here?

FALSKA: I think unions negotiated in good faith, and the city made the best deal at the time that benefitted the city, and now they're trying to do the same thing, and they don't care about the people.

HOBSON: So you think that they don't understand what you're going through right now?

FALSKA: Well, no, I mean the people who retired, you know, I sat down and figured out the income I thought I needed to live on, and now they're going to come along and say no, because the politicians mismanaged the money? It's not the retirees' fault.

HOBSON: So do you see any way that this can be resolved in a way that is going to be OK for them and OK for you?

FALSKA: Well, I think they need to privatize services, privatize the water department, privatize the public lighting, the museums, the Detroit Institute of Art. They're not able to keep these entities up. They don't have the money. So let's privatize them and give them - sell them to corporations who would pay X amount of dollars for the property and then give money back and pay taxes every year. Collect the unpaid taxes in the city of Detroit.

HOBSON: What are you going to do personally? What's your plan with all this uncertainty?

FALSKA: I don't know what I'm going to do.

HOBSON: Cynthia Falska, retired Detroit police lieutenant. Her husband also a retired police sergeant. Thanks so much, and best of luck.